Alignment Healthcare reported its second consecutive profitable quarter as a publicly trade company in part by managing medical expenses better than many of its rivals who sell Medicare Advantage coverage to older adults.
Alignment, which reported third quarter net income of $3.7 million, watched its medical benefit ratio, which is the percentage of premium revenue that goes toward medical costs, drop to 87.2%. That compares to a medical benefits ratio of 88.4% in the year-ago quarter.
The improving financial performance of Alignment, which reported its first-ever net income earlier this year in the company’s second quarter, comes as rival health insurance companies, particularly those with Medicare Advantage business, struggle to control their costs. Medicare Advantage plans contract with the federal government to provide traditional coverage available in traditional Medicare plus extra benefits and services to seniors, such as disease management and nurse help hotlines with some also offering vision, dental care and wellness programs.
But these insurers in the Medicare Advantage business have seen an uptick in medical claims from an influx of patients seeking treatment they put off during the Covid-19 pandemic. Bigger health insurers are seeing medical cost ratios at 90% or more and continue to struggle to manage their government-subsidized patients.
Alignment’s net income of $3.7 million, or 2 cents a share, compared to a net loss of $26.4 million, or 14 cents a share in the third quarter of 2024. Total revenue was up 43.5% to $993.7 million as the company continues to grow its Medicare Advantage membership.
Alignment’s total health plan membership at the end of the third quarter was up nearly 26% to 228,600. Alignment sells Medicare Advantage plans in Arizona, California, Nevada, North Carolina and Texas.
“At Alignment Healthcare, we believe Medicare Advantage should be done right – and our third quarter results are proof that it can be,” Alignment Healthcare founder and chief executive officer John Kao said. “We’re delivering consistent performance by staying focused on what matters most: high-quality care, benefit stability and personalized support for seniors, including those with complex medical needs. As others scale back, we’re leaning in with confidence in our ability to grow, improve outcomes and remain a trusted Medicare solution for seniors in our markets.”
To be sure, Humana, UnitedHealth Group, parent of UnitedHealthcare, and CVS Health’s Aetna health insurance unit are among the bigger players leaving certain states and counties in 2026. Others, however, are entering new markets or maintaining their existing geographic footprints like Alignment, which will continue to operate Medicare Advantage plans in five states and 45 counties while expanding its plan benefit packages to 68 from 56.
Health plans unveiled benefit options this month for the beginning of Medicare Open Enrollment, which began Oct. 15 and runs to Dec. 7.
